The extensive flow of information about individuals into and out of organizations that conduct underwriting and claims investigations for insurers is described in Chapter 8. Medical Information Bureau rules, however, require a court order before information about an individual may be disclosed to anyone other than a member insurance company and while the property and liability loss indexes will be satisfied with a subpoena, rather than a court order,55 they normally disclose information in their records only to a subscribing insurer submitting a properly prepared index card in connection with a current claim. The exceptions to this policy are the disclosures the Index System makes to the Marine Index Bureau and the disclosures any of the indexes may make to the Insurance Crime Prevention Institute (ICPI).
As indicated earlier, subscribers to the Index System are told to report lost-time claims filed by longshoremen. One reason for this is to make such information available to the Marine Index Bureau, whose subscribers are vessel owners. The owner of a vessel is responsible for its seaworthiness, which includes the quality of the crew.56
In addition, an index may disclose information about an individual to the Insurance Crime Prevention Institute. As one witness from the indexes told the Commission: "We are an indicator. If the reports from the index system discern a pattern that might be of interest to the carrier or the ICPI ... it is referred to them."57 According to the testimony, however, an index would not send unsolicited reports to the ICPI unless it receives "four within a relatively short period of time of the same nature," or unless, in a two-claim situation, "the accident occurred on the same date with different insurers or at a different place with the same injury." Alternatively, the ICPI may come to an index and ask for a search, in which case it is treated in the same manner as any subscriber.58
The Insurance Crime Prevention Institute
The Insurance Crime Prevention Institute is a nonprofit corporation which operates as a trade association to uncover insurance fraud for property and liability insurers. The ICPI has its headquarters in Westport, Connecticut, maintains regional offices in New York City, Chicago, and Los Angeles, and has investigators stationed in major cities throughout the country.59 Membership is open to property and liability insurance companies licensed in any of the 50 States.60 Currently its membership is made up of 312 companies that underwrite 70 percent of the casualty and property insurance business.61
ICPI's purpose is to prevent and detect fraudulent insurance claims. Its focus is solely on criminal fraud, and the Institute's bylaws specifically prohibit it from assisting companies in claims settlement or civil actions incident to settlements .62 Typically, an Institute investigation begins when a member sends information on a claim which the company suspects may involve criminal fraud. Other investigations are initiated by the ICPI based on information it receives from various sources, such as law enforcement agencies, "inside tipsters,"63 or the loss indexes. In either case, however, the ICPI has complete control over its investigative activities, and may decline or initiate investigations as it sees fit.
If an ICPI investigation produces reasonable evidence of fraud, the matter will be "reported to a public law enforcement agency for whatever action it deems to be appropriate."64 The ICPI investigator may go to insurance companies or an index for information. Going to an index will, of course, lead the investigator back to the insurers that have had claims filed by the individual under investigation. The investigation may consist of interviewing the claimant, verifying medical statements, verifying lost-wage statements, or searching police or court records 65
The Director of the ICPI testified that the Institute
exercises extreme care in referring its investigative findings to law enforcement agencies . . .. Each case is checked for completeness of investigation and sufficiency of evidence before the investigator is authorized to present his report to a law enforcement agency. Aside from considerations of fairness to the subject of the investigation, civil tort law provides adequate incentive for caution.66
Where there is evidence of professional misconduct, such as where a physician inflates a bodily injury insurance claim, the ICPI can also make its file available to licensing authorities.67
ICPI characterized its relationship with the law enforcement community in its testimony as that of a "citizen coming forward with evidence of a crime."68 The Institute will sign criminal complaints to initiate prosecution in instances where an insurance company has been the victim of a fraud and, when it does so, will voluntarily give a copy of its file to law enforcement officials. As the ICPI Director testified:
It is a generally recognized exception to the principle of confidentiality that an insurance company, finding itself to be the victim of a fraudulent claim, may voluntarily release the pertinent records of that transaction to the police to obtain criminal justice . . . . The Institute, in effect, does no more than to perform this hay: 'or the insurance company . 69
Occasionally, law enforcement officials will come tie ICPI for information:
If there is a large arson in the Bronx on Sunday night, on Monday morning we are going to get a call to ask if we have a, file on the owner . . . . If it is a legal and valid investigation, we will assist them in getting the information.70
The ICPI employs approximately 70 full-time investigators, most with law enforcement backgrounds, and is licensed as a private detective agency in those jurisdictions which require licensing.71 It investigates about 6,000 cases each year. In 1976, this resulted in the indictment of about 600 people. According to the testimony, it concentrates on two main areas of criminal fraud. The first is the ambulance-chasing attorney or the doctor who exaggerates claims, and the second is organized crime.72